I think he talked to her because he's a chicken :-) It wasn't that he chose her over you, he chose himself over you; it was easier to talk to her than not to talk to her (he might have to explain or make a scene) and using the excuse it would have appeared "rude" not to, is a generally socially acceptable excuse he hoped you would fall for.

He doesn't sound dumb enough to keep up any sort of relationship with this woman, since you are watching/know? I don't know if he'll try with someone else or if they did/did not have something going before you found out or what but I think I'd put MY foot down if the other shoe drops?